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Hobbled by High Cost, Hydrogen Fuel Cells Will Be a Modest $3 Billion Market in 2030

Tuesday, January 8, 2013 7:30 AM

The dream of a hydrogen economy envisioned for decades by politicians,
economists, and environmentalists is no nearer, with hydrogen fuel cells
turning a modest $3 billion market of about 5.9 GW in 2030, says Lux
Research.

Although the cost of hydrogen impacts fuel cell market adoption,
hydrogen fuel accounts for only 35% of the total cost of ownership (TCO)
for stationary applications and 21% of the TCO for mobile applications,
with fuel cell capital costs and membrane replacement costs making up
most of the difference.

“The hydrogen supply chain is not the most critical bottleneck for fuel
cell adoption,” said Brian Warshay, Research Associate and the lead
author of the report titled, “The
Great Compression: the Future of the Hydrogen Economy.” “High
capital costs and the low costs of incumbents provide a nearly
insurmountable barrier to adoption, except in niche applications,” he
added.

In order to determine the economic viability and potential of an
expansive hydrogen economy in the energy sectors, Lux Research conducted
a detailed analysis of the costs of hydrogen generation, distribution,
storage, and consumption in an effort to find the greatest constraints
and opportunities. Among their findings:

Hydrogen generation accounts for less than 33% of the cost at the
pump. The costs of hydrogen compression, storage, and distribution
make up the majority of the cost of hydrogen, offering the greatest
opportunities for improvement and innovation.

PEM cells will have a $1 billion stationary market. Proton
exchangemembrane (PEM) fuel cells for telecom power and backup
will reach $1 billion in 2030, while fuel cells of all types for
residential, commercial and utility generation will not prove
cost-effective.

Mobile applications will be worth $2 billion. PEM fuel cells
will reach $2 billion on the backs of forklifts and light-duty
vehicles, while buses will remain miniscule. A robust hydrogen vehicle
fueling infrastructure is necessary but ultimately insufficient to
overhaul the passenger vehicle market.

Hydrogen demand from fuel cells will total 140 million kg in 2030,
a meager 0.56% of global merchant hydrogen demand across all
industries.

The report, titled “The Great Compression: the Future of the Hydrogen
Economy,” is part of the Lux Research Grid
Storage and Electric
Vehicles Intelligence services.

About Lux Research

Lux Research provides strategic advice and ongoing intelligence for
emerging technologies. Leaders in business, finance and government rely
on us to help them make informed strategic decisions. Through our unique
research approach focused on primary research and our extensive global
network, we deliver insight, connections and competitive advantage to
our clients. Visit www.luxresearchinc.com
for more information.

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